U.S. drillers add oil rigs for 2nd week in a row -Baker Hughes

Reuters Staff

4 Min Read

Dec 1 (Reuters) - U.S. energy companies this week added oil
rigs for a second week in a row as crude prices traded near
their highest levels since the summer of 2015 as major oil
producing countries extended a global deal to limit supply.
Drillers added two oil rigs in the week to Dec. 1, bringing
the total count up to 749, the highest since September, General
Electric Co's Baker Hughes energy services firm said in
its closely followed report on Friday. RIG-OL-USA-BHI
U.S. producers applauded Thursday's decision by the
Organization of the Petroleum Exporting Countries and non-OPEC
producers led by Russia to extend oil output cuts of about 1.8
million barrels per day beyond March until the end of 2018 as
they try to finish clearing a global glut of crude.
Rising U.S. production, however, has been a thorn in OPEC's
side, undermining the impact of its output curbs.
U.S. production rose to 9.5 million bpd in September, its
highest monthly output since reaching 9.6 million bpd in April
2015, according to federal energy data going back to 2005. On an
annual basis, U.S. output peaked at 9.6 million bpd in 1970.
The U.S. rig count, an early indicator of future output, is
still much higher than a year ago when only 477 rigs were active
after energy companies boosted spending plans for 2017 as crude
started recovering from a two-year price crash around the same
time OPEC agreed to production cuts a year ago.
The increase in U.S. drilling lasted 14 months before
stalling in August, September and October as some producers
started trimming their 2017 spending plans after prices turned
softer over the summer. Energy firms started adding rigs again
in November as crude prices rose.
U.S. crude futures rose 5.5 percent in November amid
talk of extending the OPEC-led deal to cut global supply, and so
far in 2017 since the agreement kicked in, have averaged over
$50 a barrel, easily topping last year's $43.47 average.
This week, futures climbed over $58 a barrel, near their
highest since June 2015.
Looking ahead, futures were trading near $57 for calendar
2018 and $54 for calendar 2019 .
In anticipation of higher prices than in 2016, exploration
and production (E&P) companies increased their spending on U.S.
drilling and completions in 2017 by about 53 percent over 2016,
according to U.S. financial services firm Cowen & Co.
In addition, Cowen said 14 of the 64 E&Ps they track have
already provided capital expenditure guidance for 2018
indicating a 9 percent increase in planned spending over 2017.
Cowen, which has its own U.S. rig count, said it expects a
gradual decline in rigs in the fourth quarter of 2017 and in
2018.
There were 929 oil and natural gas rigs active on Dec. 1.
The average number of rigs in service so far in 2017 was 872.
That compares with 509 in 2016 and 978 in 2015. Most rigs
produce both oil and gas.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)